IT budget in companies on the rise

The IT budget in companies has grown in recent years. According to the Flexera Tech Spend Pulse 2023 report, companies invest an average of 12% of their turnover in the expansion and development of IT. This is an increase of 4% compared to the previous year. Companies with more than 10,000 employees have even almost doubled their investment on average - from 6% in 2022 to 11% in 2023. The Flexera Report reports that one in five companies worldwide will have spent more than half a billion US dollars on IT in 2023.

IT budget: increase due to inflation

Flexera is a software company from the USA that publishes its annual report on companies' IT budgets. These reports focus not only on the pure figures, but also on the derivations and justifications for the corresponding developments.

In 2023 and probably 2024, the IT budget is primarily influenced by inflation. Although higher investments sound positive on paper, they do not always go hand in hand with a larger portfolio.

Rising prices due to inflation affect the IT sector and therefore the IT budget. For 91% of the companies surveyed, inflation is at the top of the list of challenges when it comes to getting more out of the IT budget provided. Further growth is therefore rather unlikely for 2024 according to 60% of IT managers.

Added to this is the problem that 87% of companies are struggling with unnecessary and avoidable expenditure because they are in a changeover phase or are just setting up their IT. As a result, around 21% of the IT budget is lost to no effect.

The end of the coronavirus pandemic has led to a sharp decline in the expansion of remote solutions. Although working from home is still popular, companies no longer seem to feel the need to expand. In Europe, for example, just 25% of employees are back in the office on a regular basis - 75% therefore prefer to work from home.

Where does the IT budget go?

Instead of home office and remote work, clouds and software as a service (SaaS) are at the center of the IT budget. The cloud clearly dominates. 77% of companies want to increase their IT budget for cloud applications in the future. As many as 69% are planning further investments in Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).

The increasing move to the cloud is having an impact on companies' in-house data centers. These are becoming more and more obsolete. 61% of companies want to reduce the number of data centers. 8% of companies are even planning to completely eliminate their own data centers.

This is accompanied by an expansion of the entire IT Service Management (ITSM). The IT budget is always flowing towards ITSM. Cloud applications, SaaS and other investments are expanding IT service management and pursuing the primary goal of simplifying processes.

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